Merit-order control changes Czech transmission system operation

ČEPS implemented a significant change to secondary control management as of 1 April 2022, introducing so-called merit-order control, under which the price of balancing energy in a given bid becomes the decisive factor for activation. On the same date, the transmission system operator also introduced standard balancing energy products, enabling entry into the European PICASSO and MARI platforms for balancing energy exchange. Balancing energy will now be priced at the marginal price.

From the first day of April, the principle of transmission system operation is changing significantly. For the balancing service known as secondary control (also referred to as automatic frequency restoration reserve, or aFRR), ČEPS has moved from the so-called pro rata principle to merit-order control. Under the pro rata system, all contracted providers responded to the system imbalance in proportion to their size. Merit-order control brings a fundamental change in activation: providers are ranked according to the lowest offered price and activated successively to cover the system imbalance. The balancing energy price is determined by the price of the last activated bid.

„The change in transmission system management had been in preparation for more than two years. It involved interactive and intensive communication between ČEPS, balancing service providers and suppliers of control terminals. Many systems were changed both on the ČEPS side and on the service providers’ side, and I am pleased that this generational change has been successfully implemented,“ says Martin Kašák, director of the Energy Trading section at ČEPS.

Introduction of standard products

The transmission system operator will join European platforms for the cross-border exchange of balancing energy from secondary control (the PICASSO platform) and tertiary control (the MARI platform). In preparation for this step, it therefore introduced standard balancing energy products as of 1 April 2022, identical for all participating transmission system operators. This change can be characterised by the acceleration of the original products (see table) and adjustments to their control signals.

Balancing energy pricing

Another significant milestone is the transition to marginal pricing for balancing energy, under which the last activated balancing energy bid will determine the marginal price for all activated providers.